Huge investment awaits Aldi in Denmark

A new Aldi store in Spain. Illustration
Aldi is losing money in Denmark, but keeps investing.
By Reidar Molthe

30 August 2018 12:51

Huge investment awaits Aldi in Denmark

Aldi Denmark has been in Denmark for years but is still losing money every year. That, however, doesn’t stop the discount giant from having offensive investment plans, building new stores this year and further ahead.

According to Aldi, the German discounter will only keep 40 of its current stores in Denmark, while the remaining 150 stores will either be rebuilt, expanded or completely moved to better locations and in larger retail formats.

In the future, Aldi will only establish stores with a sales area of 850 sqm. and a gross area of 1,200 sqm., says Finn Tang, CEO of Aldi Denmark, in a press release.

By comparison, most of Aldi's current stores, which are gradually closed, have just a sales area of 400-500 sqm.

15 million DKK per store

According to a property developer close to the retail market, it costs at least DKK 12-13 million to build a new store that meets Aldi's demands, in a medium-sized city with 10,000-20,000 inhabitants. In addition, costs for purchase of land can quickly rise to a million DKK or more, writes www.danskhandelsblad.dk.  

Thus, Aldi can expect construction costs for every new store in the region of 15 million DKK. If Aldi stops its investments at 80 of the 150 stores, it alone means an investment 1,2 billion DKK. 

"It is clear that many supermarkets are fighting for the same customers in Denmark, but we can fortunately be part of the elimination race because we have a strong owner," says Finn Tang, who recently received 200 million DKK in fresh capital from the Aldi Nord Group to execute the new customer-focused strategy.

However, many analysts do not believe that is enough. Aldi Nord must triple that amount, maybe more?

"We now have a strong strategy that will deliver a far wider range of quality products over the next few years, and a much better shopping experience I'm sure customers will appreciate, but it takes time,” says Finn Tang.

40 years in Denmark

  • In Denmark, ALDI has existed more than 40 years, and currently has 187 stores with 2,300 employees distributed throughout the country.
  • ALDI Denmark is launching a revitalization plan, which refurbishes most of the store network.
  • More focus on fresh product, more branded goods and more Danish goods.
  • The ALDI Nord Group is one of Europe's largest discount chains, with more than 5,000 supermarkets in Spain, Portugal, France, Belgium, Holland, Luxembourg, Poland, Denmark and Germany.
Annual results20172016
Revenues
3828 mill DKK 3664
Operating profitt -313  -229
Annual results -326  -243
Equity 1505 1432

 Source: Aldi

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